Loan Charge - a beginners guide

[ContractorSeven]

I may be a bit slow here but...

If HMRC has data sufficient to make the loan charge assessment - because the individual is obliged to supply these - then these will also be the basis of settlement for an earlier year liability.

But I can't see how this applies to closed years as *only* the LC is being applied to those through special legislation. If the LC falls then, as things stand, closed years are still closed and there's nothing to pay. If the LC stands and has to be paid then there seems no basis for interest.

[webberg]

But I can't see how this applies to closed years as *only* the LC is being applied to those through special legislation. If the LC falls then, as things stand, closed years are still closed and there's nothing to pay. If the LC stands and has to be paid then there seems no basis for interest.

Your choices are:

Settle all years. Interest is charged on open years only, no loan charge arises.

Settle open years. Interest is charged. HMRC may or may not accept such a settlement. (We have had HMRC saying that they will do this and that they "cannot" do this, for different people, on the same day. If they don't know their own policy then how do we?).

In this scenario, closed years are subject to the loan charge. No interest on the loan charge if paid on time.

Do not settle and allow the loan charge to bring everything into tax (or rely upon a number of increasingly desperate schemes and structures that are appearing and which cost between 5% and 10% of the loan balance - entirely unclear why the pricing is based on loan balance as it makes no sense).

Do not settle, resist the loan charge, make a different argument, probbaly in Tribunal/Court.

[nate922]

LC and APN credits

Hi Guys,

In the following scenario, would HMRC partially refund the APN payment ?
I haven't managed to find anything concrete on APN credits and the LC.

- APN paid
- LC calculated with incurred taxes which is less than the APN paid (by having a lower salary in 18/19, personal contribution to pension)

For example,
- £20,000 APN (already paid)
- For 18/19 year, income tax (including the LC) is £10,000.

Will HMRC refund the £10k ?

Thanks

[webberg]

Hi Guys,

In the following scenario, would HMRC partially refund the APN payment ?
I haven't managed to find anything concrete on APN credits and the LC.

- APN paid
- LC calculated with incurred taxes which is less than the APN paid (by having a lower salary in 18/19, personal contribution to pension)

For example,
- £20,000 APN (already paid)
- For 18/19 year, income tax (including the LC) is £10,000.

Will HMRC refund the £10k ?

Thanks

No, they would not.

The loan charge is not settlement of the final liability.

The final liability is reached by agreeing that tax is due (or not) for the year the loan was made. The APN is a guess at that liability and a payment on account.

The loan charge amount paid will be a credit against that final liability (perhaps reducing it to nil) but only then will the APN be repayable.

[JB49]

Is the Loan Charge Likely to be thrown out?

I've been following the LCAG and seen a number of debates in parliament / interviews on BBC etc. that it is possible the Loan Charge will be kicked out / deemed illegal, as it is retrospective taxation with life changing consequences to tens of thousands of people.

Is this still likely?

[dammit chloe]

I've been following the LCAG and seen a number of debates in parliament / interviews on BBC etc. that it is possible the Loan Charge will be kicked out / deemed illegal, as it is retrospective taxation with life changing consequences to tens of thousands of people.

Is this still likely?

If you haven't joined LCAG as a full member please do and help with what's happening.

Will it be kicked out? That's what we are trying to do but it needs all those affected to get involved and contribute. Please don't lurk waiting for other people to solve it. The debates in Parliament were very much triggered by LCAG activity and pressure is building within and without Westminster.

[JB49]

If you haven't joined LCAG as a full member please do and help with what's happening.

Will it be kicked out? That's what we are trying to do but it needs all those affected to get involved and contribute. Please don't lurk waiting for other people to solve it. The debates in Parliament were very much triggered by LCAG activity and pressure is building within and without Westminster.

Okay thanks, I have joined but not as a full member (didn't know there was a difference) and have taken the action they have advised, will look into how to become a full member.

[nate922]

No, they would not.

The loan charge is not settlement of the final liability.

The final liability is reached by agreeing that tax is due (or not) for the year the loan was made. The APN is a guess at that liability and a payment on account.

The loan charge amount paid will be a credit against that final liability (perhaps reducing it to nil) but only then will the APN be repayable.

Thanks for the clarification webberg.

In an example below, will the APN be credited for the LC in SA?

APN (already paid) 10k

SA with loan charge 20k

Would net payment to HMRC £10k or £20k for the 18/19 year?

[webberg]

Thanks for the clarification webberg.

In an example below, will the APN be credited for the LC in SA?

APN (already paid) 10k

SA with loan charge 20k

Would net payment to HMRC £10k or £20k for the 18/19 year?

No. The APN is a payment on account against the year it is paid for.

I'll be producing an example later today.

[dammit chloe]

Okay thanks, I have joined but not as a full member (didn't know there was a difference) and have taken the action they have advised, will look into how to become a full member.

As a guest you only see the guest forum and only publicly safe stuff is posted there. Full member is £100 which goes to cover running costs/lobbying activity etc. Agree that somethings are not always clear. It's pretty much wholly run by busy volunteers so some things lack polish.